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jadeclam444Lv1
28 Sep 2019
The extended demand function of good Y is:
QdY = 1400-20PX - 10Py+ 0.1M
where: QdY= quantity demanded of good Y
PY = Price of good Y
M = Average consumer income
Px = Price of related good X (related in consumption to good Y)
a)
If M=10,000, Py=50, and Px=50then Qdx=____
If M=20,000, Py=50, and Px=60then Qdx=_____
c) Use these two prices and quantities demanded to calculate the value of the price elasticity of demand between these two points on the demand curve for good Y (use the arc elasticity formula). Show your work and interpret your answer. What will happen to revenues for the suppliers of good Y as the price of good Y decreases from Px=50 to Px=60? WHY?
The extended demand function of good Y is:
QdY = 1400-20PX - 10Py+ 0.1M
where: QdY= quantity demanded of good Y
PY = Price of good Y
M = Average consumer income
Px = Price of related good X (related in consumption to good Y)
a)
If M=10,000, Py=50, and Px=50then Qdx=____
If M=20,000, Py=50, and Px=60then Qdx=_____
c) Use these two prices and quantities demanded to calculate the value of the price elasticity of demand between these two points on the demand curve for good Y (use the arc elasticity formula). Show your work and interpret your answer. What will happen to revenues for the suppliers of good Y as the price of good Y decreases from Px=50 to Px=60? WHY?
Darryn D'SouzaLv10
28 Sep 2019
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